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Foreign Investment

As the US economy struggles to free itself from the grips of the worst recession in nearly 80 years foreign investment can look very attractive. Buying stocks in foreign companies is an effective means of foreign investment. It can be profitable and it does not require directly doing business in foreign lands and in foreign languages. Two basic means of investing in stock as a means of foreign investment are to purchase foreign stock or to purchase stock of US companies doing business overseas. Both can be done by investing in the US stock market . Many US multinationals offer foreign investment opportunity albeit by proxy. Investing in American Depository Receipts of foreign companies listed on the New York Stock Exchange allows stock holders to participate in foreign investment and not need to speak German, Japanese, Chinese, or any other foreign language. Investing in and trading stocks listed in the NYSE or NASDAQ commonly provides one with more and better information for fundamental analysis than if one tries to invest directly offshore. Trading electronically in US stock markets also allows traders and investors to use technical analysis tools such as Candlestick analysis in order to profitably anticipate stock price changes.

Why foreign investment? Long term investment in growth stocks can be very profitable. It may well be easier for an average stock to be a growth stock if its business is in a growing economy. Asian economies are largely leading the way out of the recession. Countries like India, Brazil, and Russia are experiencing growth in excess of what North America and Euro are seeing or likely to see with their mammoth debt burdens. By investing in stocks listed on US markets investors do not have to deal with unclear information, foreign language reports, or market manipulation that the SEC typically discourages in US markets. The same Candlestick stock charts that work well for trading or investing in a home grown US stock will work just as well for trading ADRís of European stocks such a Roche, Nestle, or Siemens, the Indian conglomerate, Tata, or Petrobas, the Brazilian oil and gas giant. These stocks are amenable to day trading or long term investing . Their fundamentals are available as the SEC requires Level II and especially level III ADRís to adhere to reporting requirements similar to those required for US stocks listed on the NASDAQ and NYSE .

Buying and selling stock in US companies that do business overseas gives investors a wide exposure to foreign investment. Companies like 3M, Cisco, Microsoft, and Proctor & Gamble do business across the face of the globe. Investors and traders can follow stock fundamentals of these companies looking for intrinsic stock value and a margin of safety . They can also follow technical aspects of these companiesí stock prices in order to profit by buying at the bottom of a price curve or selling before a market correction. Considering how volatile the markets have been recently there is a lot of potential for profit in foreign investment by those using Candlestick charts to guide the way.


Market Direction: Candlestick analysis provides insights into what a trend should be doing based upon specific formations. Candlestick analysis provides information that makes projecting the next move in a trend relatively easy to assess. Candlestick signals and patterns will have an if/then result a high percentage of the time. This makes for projecting what the trend should do from that point. As has been illustrated the appearance of a signal will indicate what a price should do as well as a lack of a signal will demonstrate what a current trend will not do. This commentary is instigated by a recent and observant comment. Sometimes the members comments as far as market direction is very nebulous. There is a very important reason. Occasionally there will be trend conditions that do not yet have enough candlestick formations/information to know what the trend will do next. That will be when a nebulous market commentary will be put forth. However, the advantage Incorporated into candlestick analysis is the graphic depiction of investor sentiment. Although there may be days when a clear and concise direction cannot be identified, candlestick analysis usually provides contingency instructions. A candlestick investor may not have a clear forecast for the next price move but further information, such as the next days premarket futures, may provide more insight into a trend direction.

 

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Good Investing,

 

The Candlestick Forum Team


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